President and Republicans Reach Agreement on Taxes

President Obama agreed to a deal with Republicans to extend the so-called “Bush tax cuts” for another two years. These cuts will apply to all tax payers in all income brackets. Several other provisions are also a part of the deal including a 13 month extension of unemployment insurance, as well as a 2 percent employee payroll tax holiday for 2011. Although not mentioned by the president in his announcement of the deal, NPGA has learned from Congressional staff that an enhanced “tax extenders” package is also being considered for inclusion in this overall tax agreement. What would this mean for the propane industry? If agreed to, it would be an extension of all the alternative fuel tax credits that have been in place since 2006. The currently expired 50 cent-per-gallon alternative fuel tax credit would be extended through 2011. The alternative fuel vehicle and alternative fuel infrastructure tax credits, set to expire at the end of 2010, would also be extended through 2011.

While the president has struck an agreement with Senate Republicans, he still has some unhappy members of his own party to convince. The Senate leaders of both parties will take this agreement to their respective caucuses for their approvals on Tuesday. If the Senate does pass this new package, it then must be considered and agreed to by the House. At press time, it is unclear where the votes line up in the House and if there will be enough Democratic votes to pass the measure. Most importantly, until we can see the actual language of the agreement, we cannot be certain if the extension of the alternative fuel tax credits affecting propane are included in this agreement.

This new agreement will occupy Congress for the time being during this lame duck session. However, there are a few other issues that need to be addressed before they adjourn for the year, the most prominent being the funding of the federal government. Up to this point, Congress has been passing Continuing Resolutions that temporarily fund the government. They will either have to pass another Continuing Resolution funding the government through some point next year or an omnibus appropriations bill that will fund the government for all of fiscal year 2011. As of now, the informal target date for adjournment is December 17.